June 26, 2015
Employees at KSL Capital’s St Regis Monarch Beach Resort

Hospitality-focused private equity manager KSL Capital has owned the St. Regis Monarch Beach Resort since May 2014. Since, the hotel has faced escalating labor problems.

In July 2014, employees at the St. Regis Monarch Beach Resort filed suit alleging violations of California minimum wage law. The alleged violations predated KSL Capital’s acquisition of the property and purportedly continued until as recently as March 2015.

The judge in May 2015 denied in part the hotel’s motion to dismiss the employees’ complaint, allowing the case to proceed.

Management of the St. Regis Monarch Beach Resort has taken a vocal stance in opposition to the efforts of employees at the hotel to unionize. St. Regis General Manager Ian Pullan, who was brought in after KSL Capital acquired the property, in March 2015 penned a letter to employees in which he said “We urge you not to sign a union authorization card or support the union.” The letter continued “We don’t need a union here” and “DON’T SIGN A UNION CARD!”

In April 2015, representatives of anti-union consulting firm Cruz & Associates began showing up at the St. Regis Monarch Beach. Among its “key services”, Cruz & Associates promises to “respond immediately and effectively to union activity,” noting “Cruz & Associates’ unmatched winning track record in workplace campaigns is evidence of our effectiveness in preserving both the employer’s and employee’s rights to a union-free workplace.”

The cost of hiring the anti-union consulting firm could be substantial – and could ultimately be borne by at least in part by KSL limited partners. In 2007, the LA Times reported that another California hotel paid Cruz & Associates more than $480,000 during the previous year to oppose efforts by employees to organize.

Will KSL limited partners ultimately bear the cost of hiring the anti-union consultant Cruz & Associates at the St. Regis Monarch Beach?

Related Issues
Related Fund Managers